Why Low Balling Salaries Is Hurting EVERYONE: An Open Letter To Employers

I’ve been doing a lot of reflecting lately on things like human capital, talent acquisition & retention, labor recruitment, the healthcare provider/clinician job market, fair market value employee compensation, and how all this reflects on the bigger ecosystem of healthcare as a whole — with some precise focus, of course, on the physical therapy industry. After getting some inside scoops in my region of the United States while comparing it with what I’ve been hearing from #PPS2015 (see here for #FOMO — and here for Reflections)… I’ve (re)realized that in healthcare, and especially in the physical therapy industry, we are making a TERRIBLE mistake by low balling salaries to vulnerable candidates such as new graduates, fresh professionals, expatriates, and those who are relocating.

This post is all about….!

It’s not a strange, nor foreign phenomenon; employers are trying to pay as little as possible to prospective employees. And, prospective candidates are trying their best to work up the courage to position themselves for a strong negotiation of fair market value compensation. Sadly, the more common case is this: new graduates in all disciplines of healthcare are always low balled… in my experience, by upwards & average of 25% of median pay for their industry (sometimes, a lot worse). Having asked around (in no particular scientific manner, per se), I’ve found that this holds true no matter the discipline I’ve investigated. In all cases, this is a problem.

It might have once worked to low ball fresh employees as a strategy of offsetting labor costs of senior staff members who have received years upon years of raises; coming about in most companies by the fact that employees are rewarded for several things: (1) loyalty, the longer you are there, the more likely they are paying you more; (2) seniority, the higher up the chain of command, the more you get paid — even if you aren’t actually adding any value; and, (3) minimal human resource requirements, so long as you don’t stir up trouble for your department and/or manager, you will likely get a more-or-less full raise minus the amount that “corporate” seemingly always & universally takes away from you no matter how good of an employee you are.

Truth be told: This is NOT working. And, it will NOT work for the Gen-X’rs & Millennials who represent > 70% of the labor force.

The problem resides right here: Factors 1, 2, and 3 in no fashion serves as incentive for performance excellence. Moreover, all it does is encourage those who can be comfortable in sticking around in mediocrity to become not only rewarded, but promoted to positions which serve to further the cause of “flying below the radar” — comfortable in just being “OK.” That’s right folks. I’m just going to say it: This type of corporate culture rewards mediocrity.

Still, this isn’t the big picture problem! See, by low balling everyone — especially those who are financially vulnerable, we’re practically eating our own young alive. Those with the most passion, the most talent, the most grit, the most willingness to go above and beyond are regularly marginalized, dismissed, reprimanded, and ostracized for giving it their all. By going beyond the call of duty, they are told to slow down — for fears that their excellence offends senior staff who have become comfortable in their years of “experience.” What is worse, these poor vulnerables are getting paid 25-40% LESS than those who are so very comfortable in their own self-set-status-quo. Despite all they contribute, it is THEIR FAULTthat their performance excellence makes senior staff jealous, makes them look bad, and ultimately exposes the fallacy of the system at large.

But, never mind that!

There is an even bigger picture economic wave at work. Through hiring managers so willing to low ball those who are most valuable, they are telling their consumers, partners, and stakeholders that no one really matters. In fact, no one is worth any dollar amount so long as they are able to bully them out of it and rip them off. Guess what happens next?! Customers and partners feel the same way — why do you think PAYMENT (not reimbursement; you’re welcome, Jerry) rates have gone down so consistently as of late in healthcare services? It isn’t because there isn’t enough money in the pool. That pool is large enough & somewhat arbitrary from an economic’s standpoint given that CMS tends to act as the ivory tower who sets the rules. The reason payment is going down is because the perceived market value of healthcare providers and their services have gone down (due to all sorts of factors like poor outcomes a la no talent in your team, to over-utilization… which is caused because???). And, they’ve gone down because internally, no one seems to value them any way!

Eventually, the behavioral consequences is this.

First, all the best talent will leave you. Since you are so happy to underpay new grads, fresh talent, and those who are relocating — bringing you all of their experience, skills, and likely novel if not innovative ideas… they will more than joyously leave you for better pastures. This will cost you upwards of 30-80% in replacement costs in talent acquisition. Secondly, you will be in a world of hurt, paying 1.5x – 2x the going hourly rate for temporary staff, not to mention lost revenue and lost market share in the long run. Thirdly, you will then demonstrate (very transparently, mind you, since all this financial data is practically open source) to your payers, partners, consumers, and stakeholders that since you don’t value your own, then they have no need nor compunction to value YOU.

AS A RESULT…!

Everyone gets paid less. Everyone loses market position. Everyone loses their ability to provide value. It costs increasingly and absurdly more to restaff, rehire, and acquire the right type of talent to serve as appropriate service sourcing to get the type of performance and outcomes you are looking for to begin with. And, while you’re scrambling for talent, you are getting killed out there by those who have gobbled up all those you have discouraged, dismissed, and disowned. They will be those who disrupt you, if not ultimately buy you out — because you lack the human capital to fight on in a long term battle you lost when you lost them. Oh, and by the way, this is already happening. Some of the largest and most successful organizations are currently suffering from immense turnover and “changes” — which we all know doesn’t mean improvements… it means things are tense, bad, and full of office drama.

And yet, the real victim of low-balling isn’t just the vulnerables you hire. You’re also not the only loser. Through the microeconomic behaviors that occur through devaluing your own people, you also devalue your segment in the industry as a whole. Ultimately, this devalues those who are willing to put in the extra mile to bring value to the marketplace. So… really, low balling… it hurts everyone. It hurts incumbents presently. It hurts emergents in the future. It hurts the next generation who needs the marketplace to be strategically positioned, growing, and sustainable. And, it hurts our CONSUMERS!

If your current business practice is to low ball those who are vulnerable, I IMPLORE YOU. PLEASE: Make your first offer a fair offer. You owe it to them. You owe it to the long term health of your business. You owe it to your profession. You owe it to your industry. And, you owe it most of all, to your customers.

And, if you represent that small margin of businesses who are currently using value based compensation for your employees: KUDOS! And, BRAVO! Please share your success. Everyone is depending on it.

Did you like the post? Don’t miss out on content you NEED to know! Sign up for our mailing list!

* indicates required

Email Address *

First Name

Last Name

Please follow and like us:

Find the Content You NEED!

Search

Fresh Perspectives: A platform for students and fresh professionals to be heard!